Following the launch of powerful new artificial intelligence chips from Nvidia, Goldman Sachs predicts significant growth in memory chips used in AI systems. His new GPU chip from Nvidia that powers the AI model, called Blackwell, requires the latest 3rd generation memory chips, also known as high-bandwidth memory (HBM/HBM3E). The investment bank expects HBM’s total addressable market to grow tenfold to $23 billion by 2026, from just $2.3 billion in 2022. Wall Street banks believe the biggest beneficiaries of the burgeoning HBM market will be three major memory makers: SK Hynix, Samsung Electronics and Micron. All three stocks are also traded in the US, Germany and the UK, and investors can also invest in his three stocks through exchange-traded funds. The Invesco Next Generation Connectivity ETF (KNCT) has a highly concentrated holding in all three stocks, while the WisdomTree Artificial Intelligence and Innovation Fund (WTAI) has less than 2% of its allocation to each stock. For the MU 1Y line, Goldman Sachs said rising AI demand would drive up shipments of AI servers and increase memory chip density per GPU, the chips that power AI, resulting in a “significant increase in estimates.” ” he said. All three companies “will benefit from strong growth in the HBM market and the financial crisis,” Goldman analysts led by Jiuni Lee said in a March 22 note to clients. [supply/demand]This will likely continue to significantly increase HBM’s price premium and increase the companies’ overall DRAM margins. ” Investors are becoming cautious about the memory market for AI systems as all three major suppliers plan to expand manufacturing capacity, adding downward pressure to the memory market. However, Goldman analysts believe that challenges such as HBM’s larger chip size and lower production yields compared to traditional DRAM memory chips will likely lead to tight supply in the near future. . “All three DRAM manufacturers are entering the HBM3E space, and despite market concerns about a potential HBM oversupply, demand from Nvidia and other AI clients amid low yields and limited supply growth. “We see supply remaining tight in the HBM3E space, given the increasing demand for it,” Citi analyst Peter Lee said in a Feb. 27 client note. “The complexity of memory manufacturing is increasing.” Goldman also cited suppliers as saying, “2024 HBM production capacity is full, but 2025 supply has already been allocated to customers.” The investment bank said SK Hynix will continue to grow at least over the next few years thanks to its “strong customer and supply chain relationships” and technology that is considered to have “superior productivity and yield compared to the company.” It is expected to maintain a market share of over 50%. Goldman analysts also said Samsung Electronics “has an opportunity to gain market share in the medium term.” Earlier this month, Nvidia CEO Jensen Hwang hinted in a media briefing that the company was in the process of qualifying for Samsung Electronics. The graphics processing unit uses his latest HBM3E chip. Meanwhile, Micron could start outperforming rivals in 2025 by focusing on the HBM3E standard, the investment bank said. —CNBC’s Michael Bloom contributed to this report.
